Author: Class Action Defense

By Gerald L. Maatman, Jr., Zach McCormack, and Ryan T. Garippo

Duane Morris Takeaways:  On September 24, 2024, in EEOC v. Total Systems Services, LLC, No. 23-CV-01311 (N.D. Ga. Sept. 24, 2024), Judge William Ray II of the U.S District Court for the Northern District of Georgia adopted a report and recommendation from a magistrate judge granting in part and denying in part Total Systems Services, LLC’s (“TSS”) motion for summary judgment on claims of disability discrimination.  In an increasingly digital world, this opinion in an EEOC enforcement lawsuit exemplifies some of the risks that employers face when allowing a portion of their workforce to work remotely.

Case Background

Plaintiff Joyce Poulson (“Poulson”) worked as a customer service representative for TSS from 2016-2020.  As a customer service representative, Poulson was assigned to take telephone calls from the clients of three different banks related to travel benefits associated with their credit cards.  Prior to the COVID-19 pandemic, TSS did not allow its employees to work remotely.  In the wake of the pandemic, however, TSS began transitioning as many employees as possible to remote work.  Poulson was not selected to be one of the employees to transition to remote work based, in part, on the fact that SunTrust Bank (i.e., one of TSS’ clients for whom she took calls) would not allow it.

In 2020, Poulson was diagnosed as a “pre-diabetic” by her doctor.  This condition did not limit her job functions and was adequately controlled by medication.  However, when one of Poulson’s other co-workers tested positive for COVID-19, Poulson’s doctor advised that she should self-quarantine (a period of time that was ultimately covered by the Family Medical Leave Act (“FMLA”)). After the period of self-quarantine, Poulson requested to continue with remote work based on her doctor’s recommendation that she was at “high-risk of suffering severe effects.”  Id. at 7.

TSS explained to Poulson that it would consider her for a remote position when the next round of remote positions became available.  TSS also asked Poulson to demonstrate that she had adequate internet speed available at home to demonstrate that she could do her job remotely.  When Poulson’s internet speed proved too slow and no remote positions opened, Poulson resigned her employment accusing TSS of exhibiting a “blatant disregard” for her health.  Id. at 9.

Poulson then took a new job where she would still have to work in person at least 50% of the time.  Moreover, in her employment application for that job, Poulson indicated that she did not have a disability.  But regardless, shortly thereafter the Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit on Poulson’s behalf claiming disability discrimination under the Americans with Disabilities Act (“ADA”), constructive discharge, and FMLA retaliation.

The Court’s Opinion

Judge William Ray II of the U.S. District Court for the Northern District of Georgia adopted a report and recommendation of a magistrate judge partially granting TSS’ motion for summary judgment.  

First, the Court found there was a genuine dispute of material fact as to whether TSS unlawfully denied Poulson’s request for a reasonable accommodation under the ADA.  To this point, TSS argued that its general accommodations in light of the COVID-19 pandemic were reasonable.  But the Court held that this theory missed the mark.  The Court reasoned that there is a “difference between a general policy that applies to all employees and an appropriate and reasonable accommodation that could overcome the precise limitations resulting from an employee’s disability.”  Id. at 20.  In the absence of a specific effort to accommodate Poulson’s disability, summary judgment could not be granted.

Second, as to the constructive discharge claim, the Court granted summary judgment.  It explained that TSS “was not responsible for the severe and pervasive effects of the COVID-19 pandemic.”  Id. at 27.  Consequently, there was nothing about its decisions with regard to remote work that would support an inference that the decision was made with the intent to force Poulson to resign.

Third, the Court concluded that the decision not to allow remote work was not sufficient to also support a claim for FMLA retaliation.  The EEOC’s theory was that the adverse action required to maintain such a claim was the denial of Poulson’s reasonable accommodation.  However, the Court explained that “there is no real distinction between ‘excluding’ [Poulson] from her requested accommodation and ‘failing to accommodate’ her request.”  Id. at 30.  In essence, this claim was more properly brought under an ADA discrimination theory.

With these rulings adopted, the Court allowed the ADA discrimination claim to be decided by a jury but dismiss the rest of the EEOC’s claims.

Implications For Employers

The prevalence of remote work has expanded in recent years and so too as the associated liability with such work.  However, the general option to work remotely does not relieve companies of their obligations under the ADA.  Corporate counsel must keep in mind that their companies are still required to engage in the interactive process, for each individual employee, in order to determine whether the requested accommodation is reasonable regardless of a company’s general remote work policies.  Otherwise, the EEOC can prove to be a formidable and aggressive litigant — who is often ready to test the sufficiency of a corporation’s policies.

By Gerald L. Maatman, Jr., Bernadette Coyle, and Ryan T. Garippo

Duane Morris Takeaways:  On September 30, 2024, in Henderson, et al. v. Reventics LLC, et al., No. 23-CV-00586 (D. Colo. Sept. 30, 2024), Magistrate Judge Michael Hegarty of the U.S. District Court for the District of Colorado granted Reventics, LLC and OMH Healthedge Holdings, Inc.’s (collectively Omega”) motion to dismiss based on lack of Article III standing in a data breach class action.  This decision represents another arrow in the quiver of corporate defendants looking to protect themselves against data breach claims involving speculative harms.

Case Background

Omega is a company that provides data analytics and software solutions to healthcare organizations.  In December 2022, Omega learned that cyber criminals exfiltrated its network and obtained the “names, dates of birth, Social Security numbers, and clinical data” of 250,000 of its clients’ patients.  Id. at 3.  Two months later, after its investigation of the cybercrime was completed, Omega sent out notices regarding the incident to the potentially affected individuals.

Within the next few weeks, Omega was sued seven times, by fifteen different plaintiffs (the “Plaintiffs”), each alleging that the cyber security incident constituted a breach of their personally identifiable information (“PII”) and protected health information (“PHI”).  These Plaintiffs all alleged that they suffered injuries in the form of:

“(1) public disclosure of private information, including Social Security numbers and medical information; (2) increased spam communications; (3) diminution of the value their PHI/PII; (4) emotional distress; (5) actual fraud; and (6) future impending injury.”

Id. at 9 (quotations omitted).  Tellingly, despite the existence of 15 separate Plaintiffs, none of these individuals could plausibly allege that they lost any money as a result of the cyber security incident.  Consequently, once all these class actions where consolidated into one proceeding, Omega moved to dismiss on the grounds that Plaintiffs lacked Article III standing to sue.

The Court’s Opinion

Magistrate Judge Hegarty granted Omega’s motion to dismiss.  In so doing, he systematically rejected each of Plaintiffs’ theories of standing.  Article III standing requires a plaintiff to plead the existence of an injury in fact, that is traceable to the defendant’s conduct, and that can be redressed by judicial relief.  Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016).  The Court reasoned that Plaintiffs failed to meet several of these requirements.

First, the Court rejected Plaintiffs’ theory that the public disclosure of their so-called “private information” constitutes a compensable injury in fact.  Plaintiffs argued that public disclosure of their alleged PII and PHI would cause them to voluntarily spend money on future credit monitoring services.  However, the Court found that “Plaintiffs cannot manufacture standing by choosing to make expenditures based on hypothetical future harm that is not certainly impending.”  Henderson, et al., No. 23-CV-00586, at 10-11 (quotations omitted).  In the absence of imminent risk of harm, the Court concluded proactive credit monitoring cannot constitute an injury.

Second, the Court found that Plaintiffs’ allegations of increased spam communications were also not an injury in fact.  But even if they were, the Court held that Plaintiffs could not plausibly allege that they received those spam communications because of Omega’s conduct.  Put differently, “there [were] no specific allegations regarding the timing of these communications from which the Court could infer a causal connection between the breach and the spam” and the theory, therefore, also failed on traceability grounds.  Id. at 12. 

Third, the Court considered and dispensed with the idea that Plaintiffs’ personal information “has independent monetary value” sufficient to support a claim for diminution of value as to that information.  Id. at 13.  Even still, the Court ruled that because Plaintiffs lacked the means to sell their own personal information at a lower price, this theory failed as well.

Fourth, as to Plaintiffs’ claims of emotional distress, the Court succinctly found that “[e]motional distress does not constitute a cognizable injury-in-fact in data privacy litigation”  Id. at 14 (quotations omitted).  This holding is aligned with other district courts around the country and should not have come as a surprise.

Fifth, the Court dismissed Plaintiffs’ claim of “actual” fraud on a different part of the standing analysis — namely its lack of traceability to Omega’s conduct.  The Court reasoned that the mere existence of isolated incidents of “fraud” alerts on the Plaintiffs’ bank accounts were not the same as actual proof that the so-called harm was caused by Omega. 

Sixth, the Court held that allegations of a “future injury based on stolen personal information” only can be considered a plausible injury in fact where accompanied by allegations of current direct harm.  Id. at 17.  If no such current harm exists, then Plaintiffs were merely speculating that harm may or may not occur in the future.

With all of these theories considered (and rejected), the Court dismissed the class action as a whole and entered judgment on behalf of Omega.

Implications For Companies

As corporate counsel is often well aware, the staggering liability associated with class actions frequently hinges on the merits of a cause of action or on whether the named plaintiff can achieve class certification.  However, in the data breach context, an attack to the named plaintiffs’ Article III standing is often a swift and efficient way to dispense of such claims. 

Corporate counsel should continue to take stock of opinions like this one under the event that their companies’ cybersecurity protocols are put to the test.

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman, special counsel Justin Donoho, and associate Tyler Zmick with their discussion of a BIPA ruling issued in the Northern District of Illinois analyzing the arguments of consumer privacy claims involving virtual “try-on” technology.

Check out today’s episode and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Samsung Podcasts, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, and YouTube.

Episode Transcript

Jerry Maatman: Thank you, loyal blog readers for joining us on this week’s installment of our podcast series, entitled The Class Action Weekly Wire. Today I am joined by my colleagues, Justin and Tyler, and we’re going to talk about all things BIPA. Justin and Tyler, welcome to the show.

Justin Donoho: Thanks, Jerry, happy to be here.

Tyler Zmick: Thank you for having me, Jerry.

Jerry: Today we’re discussing a lawsuit brought under the Illinois Biometric Information Privacy Act involving cosmetics manufacturer L’Oréal, and a ruling that emanated from the U.S. District Court for the Northern District of Illinois. Justin, could you give our readers and listeners an overview of the allegations at issue in this lawsuit?

Justin: Yes, Jerry, so this is another challenge under BIPA to virtual try-on software. We’ve seen a number of these filed against cosmetic companies. The way the software works is you’re viewing the cosmetic product on the web page, a pop up then appears, allowing you to use your web or phone cameras to upload a photo to check how the product will work on your face. And then, according to plaintiffs, the virtual try-on software then allegedly captures what the plaintiffs contend is a “scan of facial geometry” in the consumer’s photos – or you know, what that means under BIPA is a scan of sufficient geometry of the face, to be unique to the individual, and to be capable of identifying a person.

Jerry: These sorts of try-on BIPA cases are being litigated more frequently. If we talked about BIPA litigation five years ago, it typically would involve a timekeeping system and workers who checked in and checked out of work through biometric identifiers. Here, however, we’re talking about customers interacting with software. Tyler, you have quite a bit of experience in the BIPA field and space – what did you find significant in the way in which the defendant in this litigation tried to argue its motion to dismiss?

Tyler: Sure. Well, I think there were three main arguments that L’Oréal raised in its motion to dismiss. The first was that it wasn’t really a substantive argument, it was procedural, and the argument was that by using the virtual try-on tool, the plaintiff agreed to the company’s terms of use, which contain an enforceable arbitration provision. And so the argument was that this plaintiff cannot bring a class action, but must bring an individual claim in arbitration. The court rejected that argument, finding that the plaintiff did not get conspicuous enough notice. As for the substantive arguments under BIPA, L’Oréal argued that according to its privacy policy, which was presented to plaintiff, the plaintiff consented to the categories of personal information being collected from users, including plaintiff, who use the virtual try-on tool, and the language said that “if you use one of our virtual try-on features, we may collect and store your images.” And so obviously the court found that language deficient because it did not specifically address biometric information or scans of facial geometry obtained from an image. And finally, as with many defendants moving to dismiss BIPA claims, L’Oréal argued that plaintiff failed to state a claim because the complaint failed to establish the company was in possession of any biometric data, and that their technology only operates locally on users’ devices.

Jerry: I know that facts drive case decisions, but it seems that BIPA cases have gone both ways on this issue or the array of issues you just articulated in the Northern District of Illinois. How did the court rule in this particular situation?

Justin: Yes, Jerry. Interestingly, you say both ways. So yes, at least at the at the motion to dismiss stage, anyway, the courts do seem to be going both ways on these virtual try-on cosmetic cases on the key issue of whether what is being captured is sufficient facial geometry to be a unique biometric identifier. There have been a number of other cases, too, like this that also do not involve facial recognition like interview software, a pornography filter that happens to filter photos that contain a face, passport photo software, COVID screening – basically, if your company has a technology involving a face in any way and some arguable connection to Illinois, then the plaintiffs’ bar is suing, or it may have you in its crosshairs. So in this case, though there was no written decision. But it does appear, though, that this court did not rule on this key issue of whether the software captured a biometric identifier because the parties didn’t argue it in their briefs in this particular case. We’ll have to wait to see how that issue comes out if the parties ever get to the expert discovery and summary judgment stage, where likely this will become the parties main focus. So Tyler mentioned the three kind of main arguments that the defendants made in this case in their motion on. I’ll just do the first one – the main focus was the arbitration clause. By denying the motion to dismiss the court basically ruled that even though this was clickwrap instead of browsewrap, the arbitration clause in this particular instance, was not conspicuous enough for the plaintiffs to be bound, or, in other words, clicking to accept things that plaintiffs may have done was on other things, and too far removed from the terms of the arbitration agreement.

Tyler: And one more point – L’Oréal did not develop this argument – specifically the argument that the technology did not collect unique scans of face geometry – but it was addressed in passing in the briefing on the motion dismiss, and the judge basically rejected that argument, at least at the motion to dismiss stage. And the court ruled that plaintiff sufficiently alleged that the way the try-on tool works is by processing the user’s image and capturing facial geometry to identify their features, and thus the reasonable inferences of the company collected biometric data that is necessary for the tool to work. And so I think, even if the technology does not ultimately work in a way that it can uniquely identify specific individuals, that is an uphill battle to present that argument early at the pleading stage, and summary judgment may be more appropriate for that type of argument.

Jerry: Well, certainly the ruling and the case is incredibly interesting, and it underscores the innovative thinking of the plaintiffs’ bar and attacks on all sorts of customer interfacing software that has anything to do with collection of alleged biometric information. It also underscores how important consent features are in terms of a company interacting with its customers because consent – obviously the bedrock principle under BIPA – to try and get the consent to allow a collection I f there’s any question that biometrics are involved. Well, thank you for your thought leadership, Justin and Tyler, and for lending your expertise to describe this ruling. Thank you, listeners, for joining us on this week’s episode of the Class Action Weekly Wire.

Justin: Thanks, Jerry.

Tyler: Thank you everyone for tuning in.

By Ryan T. Garippo, Alex W. Karasik, and Gerald L. Maatman, Jr.

Duane Morris Takeaways:  On September 29, 2024, in Howe, et al. v. Speedway, LLC, No. 19-CV-01374, 2024 U.S. Dist. LEXIS 176263 (N.D. Ill. Sept. 29, 2024), Judge Edmond Chang of the U.S. District Court for the Northern District of Illinois denied Speedway’s two motions for summary judgment and granted Plaintiff’s motion for class certification, meaning this Illinois Biometric Information Privacy Act (the “BIPA”) class action will proceed to trial. 

This decision is significant for employers because it represents another example of a court limiting the sparse defenses available to corporate defendants in BIPA cases.

Case Background

Plaintiff worked as a manager trainee and then as a manager for Speedway, LLC (“Speedway”).   Like many employers, Speedway used finger-scan timeclocks for its employees to clock in and out of work “to avoid the problem of ‘buddy punching’ (clocking in and out for someone else).”  Id.  at *1.  These timeclocks scanned the ridges of an employee’s fingerprint and then created an alphanumeric code.  The parties disagreed as to whether this alphanumeric code could be reverse engineered to reconstruct the scan that it was based on to finger-scans. 

In 2017, Plaintiff filed a lawsuit in the Circuit Court of Cook County (Illinois) alleging violations of the BIPA, which prohibits the possession, collection, and/or disclosure of an individual’s biometric information without notice and consent.  Over the course of the last seven years, Speedway put up a vigorous defense to these claims.  It removed the case to federal court.  Howe, et al. v. Speedway, No. 17-CV-07303, 2018 WL 2445541, at *1 (N.D. Ill. May 31, 2018).  Plaintiff then filed and won a motion to remand, claiming that he himself had not suffered an injury-in-fact.  Id. at *1-7.  But then after the case proceeded for nearly two years in state court, Speedway removed the case again after the Illinois Supreme Court changed its approach to the Article III analysis.  Howe, 2024 WL 4346631, at *3, n. 5.  Speedway also filed two motions for summary judgment, a motion to exclude Plaintiff’s expert witness, and a response in opposition to class certification.  Id. at *3.

The Court’s Opinion

The Court denied Speedway’s motions for summary judgment and motion to exclude Plaintiff’s expert witness, while granting Plaintiff’s motion for class certification.

First, the Court rejected Speedway’s argument, as “a matter of first impression,” that the term “fingerprint” does not include partial prints or partial finger scans.  Id. at *7.  The Court held that the term “fingerprint” means “the ridges of the finger (or a portion of the distinctive pattern of lines on a finger), as long as that portion of the finger’s ridges or pattern is sufficient to be unique to a particular individual and is capable of being used to identify a particular person.”  Id.  As a result, the Court concluded that “[t]here is no reason that particular fingerprint, or scan of a ‘portion of the ridges of a finger’ cannot qualify as a biometric identifier” and by extension that the alphanumeric code was “biometric information under [the] BIPA.”  Id. at *8.

Second, the Court rejected Speedway’s argument that it failed to act negligently, let alone recklessly, sufficient to establish statutory damages under the BIPA.  The Court found “[o]n liability, BIPA is indeed a strict liability statute and requires no proof of particular mental state to establish a violation of the statutes notice and consent or data-retention policy requirements.”  Id. at *10.  Although such states of mind are required to obtain statutory damages, the Court concluded that there was a question of fact as to Speedway’s state of mind because it was undisputed that Speedway did not have BIPA-specific notice forms up to nine years after the BIPA’s enactment.  However, it will be up to a jury to decide whether this conduct was negligent or reckless.

Third, the Court rejected Speedway’s argument that the damages alleged were disproportionate to the harm suffered and would violate the due process clause of the U.S. Constitution.  The Court reasoned that $1,000 per-negligent violation, and $5,000 per-reckless violation, were not inherently unconstitutional damages figures.  Thus, they did not run afoul of the due process clause.  The Court was also unpersuaded by Speedway’s concern that certification of a class action implicates such significant damages.  The Court reasoned that “[s]omeone whose maximum penalty reaches the mesosphere only because the number of violations reaches the stratosphere can’t complain about the consequences of its own extensive misconduct.”  Id. at *17 (quotations omitted).

Fourth, the Court also dispensed with Speedway’s myriad of other affirmative defenses and arguments.  For a variety of reasons, the Court held that each of these defenses failed.  Further, the Court took care to note that “Speedway may still litigate whether there are any factual questions to decide” at trial.  Id. at *10.  But the Court was “skeptical” that such disputed facts exist.  Id.  With all of Speedway’s motions and defenses rejected, the Court granted Plaintiff’s motion for class certification of the “7,246 employees enrolled using its timeclocks in Illinois.”  Id. at *15. 

Implications For Businesses

Unfortunately, the story in Speedway is one that employers who utilize biometric timekeeping systems in Illinois know all too well.  A seemingly routine business decision regarding timekeeping practices evolved into exponential liability, despite a plaintiff’s own admission that he did not suffer an injury-in-fact.

Fortunately, for companies with an Illinois presence that utilize biometrics, reprieve is on the way.  On August 2, 2024, Illinois Governor J.B. Pritzker signed Senate Bill 2979, which amends the draconian penalties under Sections 15(b) and 15(d) of the BIPA.  For businesses caught in the BIPA’s crosshairs, this reform ushers in a welcome era of relief in terms of bet-the-company liability.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory S. Slotnick

Duane Morris Takeaways: On September 24, 2024,in Local 2507 et al. v. City of New York, No. 22-CV-10336, (S.D.N.Y. Sep. 24, 2024), Judge Analisa Torres of the U.S. District Court for the Southern District of New York granted class certification in a suit accusing the City of New York (the “City”) and the Fire Department of the City of New York (“FDNY”) of discriminatory pay practices, suppression of wages, and denial of employment opportunities based on sex, gender, and/or race, in violation of: (i) Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-1 et seq. (“Title VII”); (ii) the New York State Human Rights Law, New York Executive Law § 290 et seq.; and (iii) the New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq.  The Court certified a class of all persons employed by the City in the Emergency Medical Services (“EMS”) Bureau of the FDNY working as an Emergency Medical Technician, Paramedic, Lieutenant, Captain, Deputy Chief, and Division Commander/Chief at any time from December 2019 through present (the “Class”), as well as a sub-class of workers who identify as non-white, and another sub-class of employees who identify as female (the “Sub-classes”).  Plaintiffs – current and former members of the FDNY’s EMS Bureau and their representative unions – generally alleged that the City discriminates in its pay practices against members of the Class and Sub-classes (which they claim are much more demographically diverse) in favor of its mostly white, male Fire Bureau employees. 

In her order certifying the Class and Subclasses, Judge Torres explained that the plaintiffs satisfied their burden to meet the numerosity, commonality, typicality, and adequacy requirements of Rule 23, relying heavily on plaintiffs’ expert testimony and statistical analyses filed in support of their motion.  The Court was unpersuaded by the City’s arguments that variations in job title, compensation, tenure, and supervisory responsibility should preclude class certification, and stated that it would not engage in “free-ranging merits inquiries” at this stage.  Instead, the Court held that plaintiffs had offered significant proof that the City operated under a general policy of discrimination, including substantial (and sometimes unrebutted) evidence of common policies disparately impacting members of the Class and Sub-classes, and statistics confirming that EMS First Responders were more diverse by race and sex/gender, and paid significantly less, than Fire First Responders.

Case Background

Since 1996, the FDNY has functioned as an integrated department with two bureaus of first responders, including: (1) EMS (employing emergency medical technicians and paramedics, as well as their supervisors and commanding officers); and (2) Fire (employing firefighters, as well as their supervisors and commanding officers).  Id. at 2.  Plaintiffs claim that the core of the work of both EMS and Fire First Responders is the same, with their jobs substantially equal in required skill, effort, responsibility, and working conditions.  Id.  Plaintiffs contended that the City pays EMS First Responders substantially lower salaries than it pays Fire First Responders, and that Fire First Responders also receive more generous overtime, pension, disability, medical, dental, line of duty death, and educational benefits compared to EMS First Responders.  Id.  Plaintiffs also asserted that these differences in compensation result from the “pronounced difference in demographics” between EMS and Fire First Responders – specifically alleging that while EMS First Responders are “at least 55% non-white and approximately 24% female,” only “14% of Fire First Responders are non-white” and “less than 1%” are female.”  Id. at 2-3. 

The Court noted had previously denied a motion to dismiss the Complaint by the City, finding that plaintiffs’ claims were timely filed and that plaintiffs sufficiently pleaded their discrimination claims against the City.  Id. at 3. 

The Court’s Decision

The Court first set forth the applicable legal standard for class certification, including confirmation that the proposed Class must meet each of the numerosity, commonality, typicality, and adequacy requirements of Rule 23(a) by a preponderance of the evidence.  Id. at 4.       

The Court addressed the numerosity and ascertainability standards of Rule 23 together, concisely confirming that plaintiffs met their burden of a proposed class exceeding 40 members.  Id.  Moreover, the City did not contest that plaintiffs satisfied this burden, as plaintiffs asserted that the Class included approximately 4,500 to 5,000 members, with each Sub-class including well over 1,000 members, through expert analysis of pre-2023 City employment data.  Id. at 5.  The City also did not contest that the members of the Class and Sub-classes were readily identifiable and ascertainable.  Id.

Most of the Court’s analysis focused on the commonality, predominance, and typicality requirements of Rule 23 class certification.  The Court set forth the commonality standard, requiring that the action present at least one question capable of generating a “common answer apt to drive the resolution of the litigation,” but which does not mandate that the claims need be identical amongst the plaintiffs.  Id. at 5-6.  The Opinion confirmed that the commonality standard is satisfied where plaintiffs identify a unifying thread among class members’ claims warranting class treatment, and where plaintiffs show that their alleged injuries “derive from a unitary course of conduct by a single system.”  Id. at 6.  Finally, the Court confirmed that a proposed class satisfied the predominance standards “if resolution of some of the legal or factual questions that qualify each class member’s case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof,” even if other matters within a case must be tried separately (i.e., damages).  Id.  The Court noted that typicality requires each member’s claim arise from the same course of events, with similar legal arguments made to prove defendant’s liability.  Id. at 7.

Judge Torres next examined plaintiffs’ arguments in support of class certification.  Plaintiffs contended that they alleged a “unitary” course of conduct in the form of three “centralized” discriminatory policies and practices applying to all Class and Sub-class members equally, claiming the City: (1) failed to assess whether FDNY’s Fire and EMS First Responders are similarly situated for purposes of compensation; (2) as a result, failed to ensure that the occupational segregation of EMS and Fire First Responders does not disparately impact the compensation of protected groups; and (3) took affirmative steps to suppress the compensation of the more diverse EMS First Responder workforce by refusing to grant EMS personnel the “uniformed” pattern increase in collective bargaining.  Id.  In response, the City argued that the Class and Sub-classes fail to account for differences in job duties and responsibilities amongst EMS First Responders, including the fact that some respond to calls in the field while others work in dispatch or training and instruction, and different field training and tasks, such as some working as rescue paramedics, with others working advanced services.  Id. at 7-8.  The City also pointed out differences in that some EMS First Responders receive percentage increases in salary to account for additional training and responsibility, and that these variances, plus dissimilar rank and tenure, undermine plaintiffs’ commonality and typicality arguments.  Id. at 8.

The Court, however, was not persuaded by the City’s claimed distinctions based on rank and job responsibility, citing to plaintiffs’ arguments that the City took action or failed to act “in a centralized manner and on a Bureau-wide scale, uniformly suppressing the compensation of EMS First Responders regardless of rank, tenure, title, training, or assignment.”  Id.  The Court also held that questions of whether the alleged policies exist and violate federal and state law are common to all Class members, regardless of potential differences in ultimate damages owed amongst Class members.  Id.  The Court further ruled that for the same reason, the lead plaintiffs satisfied typicality because they all alleged they are paid less than their Fire counterparts due to the same policies, regardless of specific position, supervisory duties, and whether field-assigned or non-field-assigned.  Id. at 8-9. 

As for the City’s claim that plaintiffs failed to show EMS and Fire First Responders were adequate comparators for Title VII purposes, the Court opined that the City’s argument sought to turn the class certification motion into a summary judgment motion, and that Rule 23 “does not grant the court a license to engage in free-ranging merits inquiries.”  Id. at 9.  Moreover, through experts, Judge Torres found that plaintiffs offered statistical evidence in support of their disparate impact claims of racial, sex/gender, and compensation disparities among EMS and Fire First Responders, which the City did not dispute.  The Court held that at least one of the policies plaintiffs sought to substantiate—the City’s refusal to grant EMS First Responders the uniformed pattern increase in collective bargaining—was not disputed by the City’s 30(b)(6) deposition witnesses.  Id. at 9-10.  Plaintiffs further provided abundant statistical evidence and expert analysis “of a kind and degree sufficient to reveal a causal relationship” between the challenged policies and the observed racial, gender, and compensation disparities.  Id. at 10.

In summary, the Court found that plaintiffs offered significant proof that the City has “operated under a general policy of discrimination” through: (i) substantial (and in some cases unrebutted) evidence of common policies disparately impacting the Class and Sub-classes; (ii) statistical analyses showing EMS First Responders are more diverse by race and sex/gender than Fire, and are paid significantly less; and (iii) expert analyses showing EMS and Fire First Responders perform similar jobs and no job-relevant rationale explaining the difference in compensation.  Id. at 11.  The Court also very briefly confirmed that in this case, a class action is superior to individual actions, as plaintiffs alleged that individual Class members were relying on membership in the Class to vindicate their rights – another point not disputed by the City.  Finally, the Court found that the lead plaintiffs were adequate representatives, since their interests aligned with those of the Class and Subclasses, and the City did not contest this position.

Implications For Employers

The Court’s grant of class certification for the Class and Sub-classes against the City and the FDNY serves as an important reminder that employers should not necessarily count on defeating class-wide claims by pointing to different job titles and roles, salary levels, or even departments.  While this case concerns a very large employer and workforce, the Court’s opinion provides businesses with a roadmap of how courts in the Second Circuit tend to address class certification motions – particularly where plaintiffs rely heavily on expert testimony and statistical analyses to support their allegations. 

Perhaps most importantly, companies operating in New York and within the Second Circuit must remain alert and monitor potential compensation variations amongst employees performing jobs that could be considered “similar” in nature.  If they find any such variations, employers should ensure that they can pinpoint valid job-based justifications for the differences, particularly where one section of the workforce may be more demographically diverse than another.  This is especially so when businesses are applying common policies and practices to all such workers, since courts will address common questions of law and fact for all proposed class members, rather than engage in the underlying factual merits at class certification. 

Employers should heed this Opinion as a lesson on how courts evaluate class-wide claims and certification motions even where there may be concrete differences in job title, compensation, rank, the field or non-field nature of work, and the presence or absence of supervisory responsibilities.  Moreover, although situation-dependent, businesses should always be weary of not contesting allegations made by plaintiffs and their experts in all motions filed with the court, or else risk surrendering possible defenses the court would otherwise consider!

By Gerald L. Maatman, Jr., Alex W. Karasik, and Zachary J. McCormack

Duane Morris Takeaways:  In Andrews v. Bojangles OpCo, LLC, No. 3:23-CV-00593, 2024 U.S. Dist. LEXIS 163824 (W.D.N.C. Sept. 11, 2024), Judge Robert J. Conrad of the U.S. District Court for the Western District of North Carolina granted in part Plaintiffs’ motion for conditional certification of an FLSA collective action accusing Bojangles Restaurants, Inc. and Bojangles OPCO, LLC (collectively, “Bojangles”) of misclassifying Assistant General Managers (“AGM”) as exempt, which allegedly resulted in overtime violations. Plaintiffs sought to certify a nationwide collective action. While Judge Conrad granted the certification bid brought by two former AGMs, the Court limited the grant of conditional certification to workers within the State of North Carolina since the pleadings alleged unfair practices in nine Bojangles locations – all located within North Carolina.

This decision provides an excellent roadmap for employers to defend motions for conditional certification of FLSA collective actions in terms of how to limit the geographic scope of the putative collective action and therefore limit the size of the case.

Case Background

Bojangles is a chain of fast food restaurants, operating approximately 300 locations primarily in the Southeastern United States. On September 19, 2023, two former Bojangles AGMs filed a complaint alleging that Bojangles willfully violated the FLSA by classifying AGMs as overtime-exempt administrators while simultaneously requiring them to spend the bulk of their job on tasks typically assigned to hourly employees. Id. at *2. After Plaintiffs filed their complaint, two additional AGMs filed consents to join the lawsuit. Id.

In their attempt to conditionally certify the collective action, Plaintiffs argued that the putative collective members performed the same or substantially similar primary job duties, including the non-exempt tasks of cashiering, cooking, cleaning, and restocking products. Id. Furthermore, AGMs were required to cover hourly associates’ shifts when they were absent from work and that approximately 90% of AGMs’ time was spent doing manual work and customer service duties — the same tasks assigned to hourly associates. Id. at *8. Plaintiffs also claimed they lacked authority over personnel decisions, considering General Managers were required to make final decisions on employment matters. Id. at *9. Even though the AGMs were classified as salaried employees and did not receive overtime compensation for any hours worked over forty hours per week, they were scheduled to work a fifty-hour workweek, which often resulted in working more than fifty hours. Id. at *9. Furthermore, AGMs who worked at more than one Bojangles location expressed that the job duties performed as an AGM did not change from one location to another. Id. at *10.

The Court’s Decision

The Court granted in part Plaintiffs’ motion for conditional certification. Plaintiffs sought conditional certification for all AGMs who worked at any Bojangles location nationwide since September 19, 2020. Id. at *6. In response, Bojangles argued that Plaintiffs’ evidence to support its nationwide collective relates to only a small fraction of the geographic areas in which Bojangles operates. Id. at *12. Specifically, Bojangles observed that of approximately 300 Bojangles restaurant locations in multiple states, only nine North Carolina locations were represented in Plaintiffs’ pleadings. Id. Other AGMs mentioned by the Plaintiffs also worked at locations within North Carolina. Id.

Plaintiffs attempted to further persuade the Court of the nationwide collective by pointing to previous conditional certification orders by the Court which did not limit the scope of notice or require evidence to have a minimum threshold of geographic representation at the conditional certification stage. Id. at *15. The Court rejected this argument, holding that, “Plaintiffs fail to identify any authority where a nationwide class was certified on a similar record to the one currently before the Court . . . [A]lleging mere misclassification is not sufficient for collective certification, even at this stage.” Id. Accordingly, the Court held that while Plaintiffs’ evidence regarding AGMs in North Carolina warranted that conditional certification was appropriate within the State, Plaintiffs did not establish that conditional certification was appropriate nationwide.

The Court authorized a 90-day opt-in period including the establishment of a website and text messages for potential plaintiffs whose initial notice by mail and email were returned as undeliverable. Id. The Court also authorized reminder notices, as requested by Plaintiffs and ordered Bojangles to provide the names, dates of employment, addresses, and email addresses of potential plaintiffs. Id. Further, if any potential plaintiffs’ notice by mail and email become returned as undeliverable, Bojangles must provide their telephone number of the potential plaintiff. Id.

Implications For Employers

This decision provides a blueprint for one avenue to attack collective certification — limit the geographical scope of the putative collective action. Here, Plaintiffs failed to establish that nationwide conditional certification was appropriate where Plaintiffs did not provide evidence regarding putative collective members outside the State of North Carolina. Accordingly, employers should carefully examine representative evidence when crafting their opposition to motions for conditional certification.

By Gerald L. Maatman, Jr., Bernadette Coyne, and Zachary J. McCormack

Duane Morris Takeaways: On September 6, 2024, in Hamm v. Acadia Healthcare Co., Inc., No. 20-CV-1515, 2024 U.S. Dist. LEXIS 160319 (E.D. La. Sept. 6, 2024), Judge Susie Morgan of the U.S. District Court for the Eastern District of Louisiana denied Acadia LaPlace Holdings, LLC and Oschner-Acadia, LLC’s (“Acadia”) motion to decertify Plaintiffs’ Fair Labor Standards Act (“FLSA”) collective action in a suit accusing the hospital operator of failing to pay nurses for interrupted meal breaks. After the Court previously certified the collective action by applying the rigorous standard from Swales v. KLLM Transport Services, LLC, 985 F.3d 430, 441 (5th Cir. 2021), Acadia moved to decertify the collective by claiming the workers are too dissimilar for collective-wide treatment. However, the Court ruled that Acadia’s request to decertify was improper at this late stage in the litigation considering that the Court previously certified the collective action after providing the parties with the opportunity to conduct preliminary discovery and fully brief the issue. This ruling indicates that, although the Fifth Circuit has not ruled on whether a defendant can bring a motion to decertify after certification has been granted, this issue is becoming ripe for appellate review.

Case Background

Acadia is a leading provider of behavioral healthcare services that operates a network of approximately 250 facilities in thirty-eight states and Puerto Rico. Acadia previously employed Plaintiffs Amy Hamm and Joye Wilson as nurses at hospitals it operated in Texas and Louisiana. Hamm, 2024 U.S. Dist. LEXIS 160319, at *3. On May 22, 2020, Plaintiffs filed a complaint alleging Acadia violated the FLSA and Louisiana state law by failing to pay overtime compensation for on-duty meal periods and off-the-clock work. Id. Specifically, the two former workers claimed the hospital operator automatically deducted 30 minutes from the nurses’ paychecks for meal breaks despite constant interruptions and the requirement to remain on call to respond to potential emergencies during the breaks. Id.

On March 7, 2022, Plaintiffs moved for certification of their FLSA claims as a collective action, but prior to hearing Plaintiffs’ motion, the Court found that “limited discovery [was] needed” to evaluate “whether the employees in [the] proposed collective action [were] similarly situated” within the meaning of Section 216(b) of the FLSA. Id. Ultimately, after conducting the limited discovery, the Court partially granted Plaintiffs’ motion to certify, and on July 13, 2022, defined the collective action to include all current and former hourly, non-exempt employees directly involved with patient care — such as nurses, nursing staff, aides and technicians — who worked for Acadia between May 2017 through the date of the dispute’s resolution. Acadia later filed its motion to decertify Plaintiffs’ collective action, arguing that the named and opt-in plaintiffs were not sufficiently similar to be combined into a collective action because of differences between the jobs, meal break experiences, and the claims alleged by the Plaintiffs and the potential opt-in members. Id. at *4.

The Court’s Decision

Until January 2021, district courts within the Fifth Circuit generally applied the test derived from Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987),during the certification process for FLSA collective actions. The Lusardi test divided the notice and class certification process into two steps. In the first step, referred to as “conditional certification,” the court determined whether the proposed opt-in plaintiffs and the named plaintiffs were similarly situated. Hamm, 2024 U.S. Dist. LEXIS 160319, at *5. The plaintiff’s burden at this step was minimal, and as such, most collective actions are typically certified. Id. The second step, which occurrs at the conclusion of discovery, and was often prompted by a motion to decertify by the defendant, requires a more rigorous determination of whether the named plaintiffs and the opt-in plaintiffs were similarly situated. Id. If not, the named plaintiffs could only bring the lawsuit on their individual behalf, not on behalf of the opt-in plaintiffs. Id. at *6.

The Fifth Circuit rejected the Lusardi approach in Swales, and now district courts within the Fifth Circuit are instructed to “rigorously scrutinize” whether the named plaintiffs and potential opt-in plaintiffs are sufficiently similar to each other at the outset of litigation, before potential opt-in plaintiffs can be notified of the FLSA action. Id. Courts in the Fifth Circuit now identify what facts and legal considerations are material to making the “similarly situated” determination and authorize preliminary discovery accordingly. Id. The Swales decision further directs courts to make the certification decision “as early as possible.” Id.

In Acadia’s motion to decertify, it asked the Court to undertake a post-discovery decertification inquiry reminiscent of the second stage of the Lusardi test. Id. at *9. Specifically, Acadia argued that evidence obtained during the preliminary discovery phase revealed differences between the jobs, meal break experiences, and claims of Plaintiffs and opt-in members, and established that the members of the collective action were not “similarly situated” under Section 216(b). Id. at *10. In response, Plaintiffs argued that Acadia’s motion was moot because the Court already declared Plaintiffs were similarly situated under the rigorous Swales approach, and certified the FLSA collective action. Id. at *11. In its reply, Acadia advanced a proposition that “[a]t the decertification stage, even post-Swales, it is still Plaintiffs’ burden to prove and maintain through the litigation that the collective members are similarly situated.” Id. Acadia argued that using the Swales framework in lieu of the Lusardi two-step process does not mean defendants forfeit their ability to later seek decertification. Id. at *13.

Ultimately, Judge Morgan ruled that Acadia’s motion to decertify came too late and that “to allow such a motion would be a waste of judicial resources.” Id. The Court reasoned that once certified under the Swales framework, after an opportunity to conduct preliminary discovery and fully brief the issues, there is no justification for a motion to decertify. Id. Although the Fifth Circuit has not yet ruled on whether a defendant may bring a motion to decertify after the initial certification of an FLSA collective action under the Swales framework, Judge Morgan opined that the Swales decision was not intended to allow this. Id. at *14. 

Implications For Employers

The Hamm ruling provides guidance to employers with operations in the Fifth Circuit as to how a court will treat a motion to decertify filed after the court has granted certification utilizing the Swales standard. Moving forward, employers in the Fifth Circuit should aim to break up a proposed collective action during the fact-intensive certification process conducted towards the beginning of the litigation. Courts are unlikely to require plaintiffs to maintain, throughout the litigation, that collective members are similarly situated. Corporate counsel should take note that “conditional certification” remains non-existent in the Fifth Circuit, and once a court considers all available evidence to grant Section 216(b) certification, it is unlikely to revisit the issue.